SANN News
Amid tough tariffs imposed by US President Donald Trump and global trade tensions, India’s central bank, the Reserve Bank of India (RBI), on Friday cut its repo rate by 25 basis points to 5.25 percent. The decision was taken unanimously by the Monetary Policy Committee, hoping that negative price pressures (low inflation) and a drop in exports could provide relief to major economies.
Some analysts had expected that further cuts would not be easy as the RBI has already cut more than 100 basis points in three installments this year. But most have said that the rate cut is appropriate considering the negative impact of high customs duties and export curbs imposed by Trump-US on the Indian economy.
RBI Governor Sanjay Malhotra revealed that the bank has decided to buy more than $ 111 million in government securities in the open market and plans to buy and sell $ 5 billion through three-year dollar-rupee swaps to ensure foreign exchange liquidity. He also kept the possibility of further rate cuts open by adopting a “neutral stance” on monetary policy.
India is currently facing challenges such as declining exports, an unstable rupee and slowing economic growth. Meanwhile, Prime Minister Narendra Modi’s government has already taken initiatives to promote economic activity through consumption tax cuts and labor law reforms.
Amidst trade volatility with other countries, the RBI’s new rate cut is expected to bring some relief to industry, exporters and consumers.
